Ed Balls cautions against early EU referendum

Ed Balls, the shadow chancellor, has told the British Chambers of Commerce he is opposed to setting an arbitrary timetable for a quick European referendum but in favour of hard talks and banging the table to achieve reform with his EU partners.

But he said meaningful reforms could not be achieved by 2016 and insisted there was evidence that the current uncertainty about Britain’s relations with Europe was setting back big investment decisions.

He was responding to a call from John Longworth, the chambers’ director general, who said the best way to end political uncertainty over the UK’s relations with Europe was to hold an early referendum.

Balls urged a more positive approach to Europe, saying: “If you start by giving the impression that you have already given up, that is the way to lose an argument in Europe and I fear that is the judgment people are making in Europe at the moment.”

He said “the talks would be hard, but the answer is you don’t give up. We have to take our time.”

He said Europe’s priority was sorting out the eurozone, not its relations with the UK or treaty change. “The eurozone is in a chronic state, they have got very difficult decisions to face up to and it is really important for Britain that they do,” he said.

He ridiculed the Tory negotiating stance, saying “the idea of a treaty change by 2016 is not on the table, but if you go out there for domestic political reasons and say: ‘We demand a reform agenda but, by the way, we are not going to tell you what it is because that might destabilise our politics,’ people are going to say: ‘You are not in the real world and you are not serious.’”

He warned that if the UK’s partners in Europe thought Britain was playing politics, “they will give up on us. You don’t walk out of summits, you don’t let them think that you have given up, that is how you will lose influence.”

Balls, a longtime opponent of British membership of the euro, said: “The biggest risk to jobs and investment in the UK is its relationship with Europe. The reality is that we have a slow recovery, and … there is a real danger that businesses are delaying and deferring big decisions because of the uncertainty.”

Labour had hoped that its broad opposition to a referendum was its best card with business, but Longworth has argued that even if Labour were elected, the party would come under enormous pressure to hold a referendum, so the best way to handle the issue would be to commit to an early vote.

There has been pressure inside the Conservative party for David Cameron to commit to an early referendum, but officially the party has not shifted from its commitment to hold a referendum by the end of 2017 at the close of negotiations with the EU.

Longworth said the country could not afford to wait until the end of 2017.

“We need to bring the referendum date forward because two and a half years of uncertainty isn’t good for growth and investment,” he said in an interview with the BBC.

“It should be no more than 12 months after the general election.

“To those who believe that Britain is better served by disengaging, either from nearby trading partners, or from the pursuit of economic growth, I say that it is only if we deliver an open and enterprising economy that we will meet our aspirations, and it is only through growth that we will avoid becoming a Ruritanian backwater or a living museum,” he said.

“The next government must set out what it will do to protect the United Kingdom against the prospect of being in a club where all the decisions are made by, and for, the eurozone.

“More than any repatriation of powers, businesses want to know that the UK has safeguards against being drawn closer to the eurozone – especially as history tells us that currency unions inevitably fall apart unless there is real political, economic and social integration.

“Without true reform, business support for the European project is far from guaranteed. A new settlement for Britain in Europe is essential to achieving our economic ambitions – helping our businesses succeed here at home, and across the world.

“Above all, the debate over Europe must not be hijacked by political ideology. Economic pragmatism – what’s best for Britain, for British business, for our national growth ambitions – must win the day.”

Foreign Office civil servants are dubious that negotiations with the EU can be completed in 2016 given the complexity of the issues. The Conservatives have not yet set out the details of their negotiating position beyond promising to tighten immigration to the UK. Cameron has claimed this might require treaty change and so render the talks with other EU member states much more complex.

Matthew Elliott, chief executive of Business for Britain, which campaigns for changes to the UK’s EU membership, said: “The polls are clear, business backs an EU referendum as firms know it is the only way to secure a new, more competitive deal with the EU.

“Those who claim to want changes but oppose the only way to ensure them are doing little more than paying lip service to the idea of reform. Labour’s opposition to a referendum might give it a good soundbite, but it also reveals the party is scared of voters and ignorant to what business really wants.”